IDEAS home Printed from https://ideas.repec.org/p/osf/osfxxx/tzmf2.html
   My bibliography  Save this paper

Spatial Diffusion of Economic Shocks in the Labor Market: Evidence from a Mining Boom and Bust

Author

Listed:
  • Rodríguez-Puello, Gabriel
  • Rickardsson, Jonna

Abstract

Little is known about the spatial diffusion of the effects of economic shocks on the labor market. We use the mining boom resulting from the unexpected increase in the international prices of resources, geocoded microdata originating from administrative registers of individuals in Sweden, and dynamic difference-in-differences specifications to assess the spatial diffusion of economic shocks on labor market outcomes; we focus specifically on people to determine who is affected by the mining boom. We find consistent short- and long-lasting positive effects of the mining boom on individual earnings that spread as far as 83 km from the mining site. We also find a large gain in earnings and employment for residents directly employed in the mining sector, accompanied by significant spillover effects in other sectors. Furthermore, we find evidence of the migration of young, nonmarried, and highly educated individuals to the mining area, who obtain benefits from the mining boom in terms of earnings and employment; this is especially true for migrants who relocate to work directly in the mining sector.

Suggested Citation

  • Rodríguez-Puello, Gabriel & Rickardsson, Jonna, 2024. "Spatial Diffusion of Economic Shocks in the Labor Market: Evidence from a Mining Boom and Bust," OSF Preprints tzmf2, Center for Open Science.
  • Handle: RePEc:osf:osfxxx:tzmf2
    DOI: 10.31219/osf.io/tzmf2
    as

    Download full text from publisher

    File URL: https://osf.io/download/66ddcb653cecd3d8ab77b155/
    Download Restriction: no

    File URL: https://libkey.io/10.31219/osf.io/tzmf2?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Brunnschweiler, Christa N. & Bulte, Erwin H., 2008. "The resource curse revisited and revised: A tale of paradoxes and red herrings," Journal of Environmental Economics and Management, Elsevier, vol. 55(3), pages 248-264, May.
    2. Fernando M. Arag?n & Juan Pablo Rud, 2013. "Natural Resources and Local Communities: Evidence from a Peruvian Gold Mine," American Economic Journal: Economic Policy, American Economic Association, vol. 5(2), pages 1-25, May.
    3. Rabah Arezki & Valerie A. Ramey & Liugang Sheng, 2017. "News Shocks in Open Economies: Evidence from Giant Oil Discoveries," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 132(1), pages 103-155.
    4. Stephen Gibbons & Henry G. Overman, 2012. "Mostly Pointless Spatial Econometrics?," Journal of Regional Science, Wiley Blackwell, vol. 52(2), pages 172-191, May.
    5. Simon Freyaldenhoven & Christian Hansen & Jorge Perez Perez & Jesse Shapiro, 2021. "Visualization, Identification, and stimation in the Linear Panel Event-Study Design," Working Papers 21-44, Federal Reserve Bank of Philadelphia.
    6. Dan Black & Terra McKinnish & Seth Sanders, 2005. "The Economic Impact Of The Coal Boom And Bust," Economic Journal, Royal Economic Society, vol. 115(503), pages 449-476, April.
    7. Amarasinghe, Ashani & Hodler, Roland & Raschky, Paul A. & Zenou, Yves, 2024. "Key players in economic development," Journal of Economic Behavior & Organization, Elsevier, vol. 223(C), pages 40-56.
    8. David H. Autor & David Dorn & Gordon H. Hanson, 2013. "The China Syndrome: Local Labor Market Effects of Import Competition in the United States," American Economic Review, American Economic Association, vol. 103(6), pages 2121-2168, October.
    9. Mamo, Nemera & Bhattacharyya, Sambit & Moradi, Alexander, 2019. "Intensive and extensive margins of mining and development: Evidence from Sub-Saharan Africa," Journal of Development Economics, Elsevier, vol. 139(C), pages 28-49.
    10. Nathan Nunn & Nancy Qian, 2014. "US Food Aid and Civil Conflict," American Economic Review, American Economic Association, vol. 104(6), pages 1630-1666, June.
    11. Dan A. Black & Terra G. McKinnish & Seth G. Sanders, 2005. "Tight Labor Markets and the Demand for Education: Evidence from the Coal Boom and Bust," ILR Review, Cornell University, ILR School, vol. 59(1), pages 3-16, October.
    12. van der Ploeg, Frederick & Poelhekke, Steven, 2010. "The pungent smell of "red herrings": Subsoil assets, rents, volatility and the resource curse," Journal of Environmental Economics and Management, Elsevier, vol. 60(1), pages 44-55, July.
    13. Aguilar-Gomez, Sandra & Benshaul-Tolonen, Anja, 2023. "The evolution and persistence of women's roles: Evidence from the Gold Rush," Journal of Economic Behavior & Organization, Elsevier, vol. 215(C), pages 364-381.
    14. Wilson, Nicholas, 2012. "Economic booms and risky sexual behavior: Evidence from Zambian copper mining cities," Journal of Health Economics, Elsevier, vol. 31(6), pages 797-812.
    15. Giuseppe Arbia, 2001. "articles: Modelling the geography of economic activities on a continuous space," Papers in Regional Science, Springer;Regional Science Association International, vol. 80(4), pages 411-424.
    16. Douglas L. Miller, 2023. "An Introductory Guide to Event Study Models," Journal of Economic Perspectives, American Economic Association, vol. 37(2), pages 203-230, Spring.
    17. Johanna Richter & Alliana Salanguit & Alexander James, 2018. "The (Uneven) Spatial Distribution of the Bakken Oil Boom," Land Economics, University of Wisconsin Press, vol. 94(4), pages 577-592.
    18. A. Colin Cameron & Jonah B. Gelbach & Douglas L. Miller, 2011. "Robust Inference With Multiway Clustering," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 29(2), pages 238-249, April.
    19. E. D. Gould, 2007. "Cities, Workers, and Wages: A Structural Analysis of the Urban Wage Premium," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 74(2), pages 477-506.
    20. Faber, Marius & Sarto, Andrés & Tabellini, Marco, 2021. "Local Shocks and Internal Migration: The Disparate Effects of Robots and Chinese Imports in the US," IZA Discussion Papers 14623, Institute of Labor Economics (IZA).
    21. Elissaios Papyrakis, 2017. "The Resource Curse - What Have We Learned from Two Decades of Intensive Research: Introduction to the Special Issue," Journal of Development Studies, Taylor & Francis Journals, vol. 53(2), pages 175-185, February.
    22. Ferdinando Monte & Stephen J. Redding & Esteban Rossi-Hansberg, 2018. "Commuting, Migration, and Local Employment Elasticities," American Economic Review, American Economic Association, vol. 108(12), pages 3855-3890, December.
    23. Fernando M. Aragón & Juan Pablo Rud, 2016. "Polluting Industries and Agricultural Productivity: Evidence from Mining in Ghana," Economic Journal, Royal Economic Society, vol. 126(597), pages 1980-2011, November.
    24. Yankow, Jeffrey J., 2006. "Why do cities pay more? An empirical examination of some competing theories of the urban wage premium," Journal of Urban Economics, Elsevier, vol. 60(2), pages 139-161, September.
    25. Grant D. Jacobsen & Dominic P. Parker & Justin B. Winikoff, 2023. "Are Resource Booms a Blessing or a Curse? Evidence from People (Not Places)," Journal of Human Resources, University of Wisconsin Press, vol. 58(2), pages 393-420.
    26. Pelzl, Paul & Poelhekke, Steven, 2021. "Good mine, bad mine: Natural resource heterogeneity and Dutch disease in Indonesia," Journal of International Economics, Elsevier, vol. 131(C).
    27. James Cust & Steven Poelhekke, 2015. "The Local Economic Impacts of Natural Resource Extraction," Annual Review of Resource Economics, Annual Reviews, vol. 7(1), pages 251-268, October.
    28. Guy Michaels, 2011. "The Long Term Consequences of Resource‐Based Specialisation," Economic Journal, Royal Economic Society, vol. 121(551), pages 31-57, March.
    29. James, Alex & Aadland, David, 2011. "The curse of natural resources: An empirical investigation of U.S. counties," Resource and Energy Economics, Elsevier, vol. 33(2), pages 440-453, May.
    30. Isaiah Andrews & Maximilian Kasy, 2019. "Identification of and Correction for Publication Bias," American Economic Review, American Economic Association, vol. 109(8), pages 2766-2794, August.
    31. von der Goltz, Jan & Barnwal, Prabhat, 2019. "Mines: The local wealth and health effects of mineral mining in developing countries," Journal of Development Economics, Elsevier, vol. 139(C), pages 1-16.
    32. Alexander W. Bartik & Janet Currie & Michael Greenstone & Christopher R. Knittel, 2019. "The Local Economic and Welfare Consequences of Hydraulic Fracturing," American Economic Journal: Applied Economics, American Economic Association, vol. 11(4), pages 105-155, October.
    33. Bazillier, Remi & Girard, Victoire, 2020. "The gold digger and the machine. Evidence on the distributive effect of the artisanal and industrial gold rushes in Burkina Faso," Journal of Development Economics, Elsevier, vol. 143(C).
    34. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(1), pages 249-275.
    35. Jiafeng Chen & Jonathan Roth, 2024. "Logs with Zeros? Some Problems and Solutions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 139(2), pages 891-936.
    36. Alexander G. James & Brock Smith, 2020. "Geographic Dispersion of Economic Shocks: Evidence from the Fracking Revolution: Comment," American Economic Review, American Economic Association, vol. 110(6), pages 1905-1913, June.
    37. Fernando M. Aragón & Juan Pablo Rud, 2016. "Polluting Industries and Agricultural Productivity: Evidence from Mining in Ghana," Economic Journal, Royal Economic Society, vol. 126(597), pages 1980-2011.
    38. Corden, W Max & Neary, J Peter, 1982. "Booming Sector and De-Industrialisation in a Small Open Economy," Economic Journal, Royal Economic Society, vol. 92(368), pages 825-848, December.
    39. Clay, Karen & Jones, Randall, 2008. "Migrating to Riches? Evidence from the California Gold Rush," The Journal of Economic History, Cambridge University Press, vol. 68(4), pages 997-1027, December.
    40. Rick Van der Ploeg & Steven Poelhekke, 2010. "The Pungent Smell of “Red Herrings’: Subsoil assets, rents, volatility and the resource curse," OxCarre Working Papers 033, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
    41. Meyer, Bruce D, 1995. "Natural and Quasi-experiments in Economics," Journal of Business & Economic Statistics, American Statistical Association, vol. 13(2), pages 151-161, April.
    42. Riley Wilson, 2022. "Moving to Economic Opportunity: The Migration Response to the Fracking Boom," Journal of Human Resources, University of Wisconsin Press, vol. 57(3), pages 918-955.
    43. Brian C. Cadena & Brian K. Kovak, 2016. "Immigrants Equilibrate Local Labor Markets: Evidence from the Great Recession," American Economic Journal: Applied Economics, American Economic Association, vol. 8(1), pages 257-290, January.
    44. Brantly Callaway & Andrew Goodman-Bacon & Pedro H. C. Sant'Anna, 2021. "Difference-in-Differences with a Continuous Treatment," Papers 2107.02637, arXiv.org, revised Jan 2024.
    45. Kenneth J. Singleton, 2014. "Investor Flows and the 2008 Boom/Bust in Oil Prices," Management Science, INFORMS, vol. 60(2), pages 300-318, February.
    46. Francesco Caselli & Guy Michaels, 2013. "Do Oil Windfalls Improve Living Standards? Evidence from Brazil," American Economic Journal: Applied Economics, American Economic Association, vol. 5(1), pages 208-238, January.
    47. James Feyrer & Erin T. Mansur & Bruce Sacerdote, 2017. "Geographic Dispersion of Economic Shocks: Evidence from the Fracking Revolution," American Economic Review, American Economic Association, vol. 107(4), pages 1313-1334, April.
    48. Alina Kovalenko, 2023. "Natural Resource Booms, Human Capital, and Earnings: Evidence from Linked Education and Employment Records," American Economic Journal: Applied Economics, American Economic Association, vol. 15(2), pages 184-217, April.
    49. Marynia Kolak & Luc Anselin, 2020. "A Spatial Perspective on the Econometrics of Program Evaluation," International Regional Science Review, , vol. 43(1-2), pages 128-153, January.
    50. Grant D. Jacobsen & Dominic P. Parker, 2016. "The Economic Aftermath of Resource Booms: Evidence from Boomtowns in the American West," Economic Journal, Royal Economic Society, vol. 126(593), pages 1092-1128, June.
    51. Simon Franklin & Julien Labonne, 2019. "Economic Shocks and Labor Market Flexibility," Journal of Human Resources, University of Wisconsin Press, vol. 54(1), pages 171-199.
    52. Butts, Kyle, 2023. "JUE Insight: Difference-in-differences with geocoded microdata," Journal of Urban Economics, Elsevier, vol. 133(C).
    53. Hunt Allcott & Daniel Keniston, 2018. "Dutch Disease or Agglomeration? The Local Economic Effects of Natural Resource Booms in Modern America," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 85(2), pages 695-731.
    54. James Cust & Torfinn Harding & Pierre-Louis Vézina, 2019. "Dutch Disease Resistance: Evidence from Indonesian Firms," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 6(6), pages 1205-1237.
    55. Krugman, Paul, 1987. "The narrow moving band, the Dutch disease, and the competitive consequences of Mrs. Thatcher : Notes on trade in the presence of dynamic scale economies," Journal of Development Economics, Elsevier, vol. 27(1-2), pages 41-55, October.
    56. James Feyrer & Erin Mansur & Bruce Sacerdote, 2020. "Geographic Dispersion of Economic Shocks: Evidence from the Fracking Revolution: Reply," American Economic Review, American Economic Association, vol. 110(6), pages 1914-1920, June.
    57. Vazquez-Bare, Gonzalo, 2023. "Identification and estimation of spillover effects in randomized experiments," Journal of Econometrics, Elsevier, vol. 237(1).
    58. Lawrence F. Katz & Olivier Blanchard, 1999. "Wage Dynamics: Reconciling Theory and Evidence," American Economic Review, American Economic Association, vol. 89(2), pages 69-74, May.
    59. Weber, Jeremy G., 2012. "The effects of a natural gas boom on employment and income in Colorado, Texas, and Wyoming," Energy Economics, Elsevier, vol. 34(5), pages 1580-1588.
    60. Martin Andersson & Johan Klaesson & Johan P Larsson, 2014. "The sources of the urban wage premium by worker skills: Spatial sorting or agglomeration economies?," Papers in Regional Science, Wiley Blackwell, vol. 93(4), pages 727-747, November.
    61. Andrew Foote & Michel Grosz & Ann Stevens, 2019. "Locate Your Nearest Exit: Mass Layoffs and Local Labor Market Response," ILR Review, Cornell University, ILR School, vol. 72(1), pages 101-126, January.
    62. Sachs, Jeffrey D. & Warner, Andrew M., 2001. "The curse of natural resources," European Economic Review, Elsevier, vol. 45(4-6), pages 827-838, May.
    63. Andrew F. Reeson & Thomas G. Measham & Karin Hosking, 2012. "Mining activity, income inequality and gender in regional Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 56(2), pages 302-313, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Grant D. Jacobsen, 2019. "Who Wins In An Energy Boom? Evidence From Wage Rates And Housing," Economic Inquiry, Western Economic Association International, vol. 57(1), pages 9-32, January.
    2. Pelzl, Paul & Poelhekke, Steven, 2021. "Good mine, bad mine: Natural resource heterogeneity and Dutch disease in Indonesia," Journal of International Economics, Elsevier, vol. 131(C).
    3. Jaimes, Richard & Gerlagh, Reyer, 2020. "Resource-richness and economic growth in contemporary U.S," Energy Economics, Elsevier, vol. 89(C).
    4. De Haas, Ralph & Poelhekke, Steven, 2019. "Mining matters: Natural resource extraction and firm-level constraints," Journal of International Economics, Elsevier, vol. 117(C), pages 109-124.
    5. Ralph de Haas & Steven Poelhekke, 2016. "Mining Matters: Natural Resource Extraction and Local Business Constraints," CESifo Working Paper Series 6198, CESifo.
    6. Guettabi, Mouhcine & James, Alexander, 2020. "Who benefits from an oil boom? Evidence from a unique Alaskan data set," Resource and Energy Economics, Elsevier, vol. 62(C).
    7. Coulibaly, Massa & Foltz, Jeremy & Parker, Dominic & Olurotimi, Osaretin & Traoré, Nouhoum, 2024. "The effects of mining on local poverty in developing countries: Evidence from Mali," World Development, Elsevier, vol. 180(C).
    8. Zuo, Na & Zhong, Hua, 2020. "Can resource policy reverse the resource curse? Evidence from China," Resources Policy, Elsevier, vol. 68(C).
    9. Diemer, Andreas, 2020. "Spatial diffusion of local economic shocks in social networks: evidence from the US fracking boom," LSE Research Online Documents on Economics 105868, London School of Economics and Political Science, LSE Library.
    10. Grant Mark Nülle & Graham A. Davis, 2018. "Neither Dutch nor disease?—natural resource booms in theory and empirics," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 31(1), pages 35-59, May.
    11. Joseph Marchand & Jeremy Weber, 2018. "Local Labor Markets And Natural Resources: A Synthesis Of The Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 32(2), pages 469-490, April.
    12. Ralph De Haas & Steven Peolhekke, 2016. "Mining Matters: Natural Resource Extraction," OxCarre Working Papers 175, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
    13. Badeeb, Ramez Abubakr & Lean, Hooi Hooi & Clark, Jeremy, 2017. "The evolution of the natural resource curse thesis: A critical literature survey," Resources Policy, Elsevier, vol. 51(C), pages 123-134.
    14. James Cust & Torfinn Harding & Pierre-Louis Vézina, 2019. "Dutch Disease Resistance: Evidence from Indonesian Firms," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 6(6), pages 1205-1237.
    15. Zhang, Haoran, 2023. "Coal busts and urban recovery: Evidence from China," Regional Science and Urban Economics, Elsevier, vol. 101(C).
    16. Ampofo, Akwasi & Cheng, Terence C. & Doko Tchatoka, Firmin, 2022. "Oil extraction and spillover effects into local labour market: Evidence from Ghana," Energy Economics, Elsevier, vol. 106(C).
    17. Sandro Provenzano & Hannah Bull, 2021. "The Local Economic Impact of Mineral Mining in Africa: Evidence from Four Decades of Satellite Imagery," Papers 2111.05783, arXiv.org, revised Jun 2023.
    18. Jason P. Brown & Timothy Fitzgerald & Jeremy G. Weber, 2019. "Does Resource Ownership Matter? Oil and Gas Royalties and the Income Effect of Extraction," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 6(6), pages 1039-1064.
    19. Nemera Gebeyehu Mamo, 2018. "Essays on natural resources in Africa: local economic development, multi-ethnic coalitions and armed conflict," Economics PhD Theses 0518, Department of Economics, University of Sussex Business School.
    20. Bazillier, Remi & Girard, Victoire, 2020. "The gold digger and the machine. Evidence on the distributive effect of the artisanal and industrial gold rushes in Burkina Faso," Journal of Development Economics, Elsevier, vol. 143(C).

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:osf:osfxxx:tzmf2. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: OSF (email available below). General contact details of provider: https://osf.io/preprints/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.